A bigger review system for "business method" patents is out—in both bills.

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Two weeks after an anti-patent-troll bill was introduced in the House, a different bill (PDF) on the same topic has been introduced in the Senate.

The new bill (overview, PDF) has one new thing that reformers wanted but didn't get in the House bill, which is a provision to allow the Federal Trade Commission to prosecute patent-holders who send out misleading threat letters. Some patent owners have sent out thousands of letters to small businesses in the past few years asking for patent royalties, a pattern that has raised the ire of many in Congress. Such patent owners were denounced as "bottom feeders" in a Senate subcommittee hearing earlier this month.

Anyone sending out letters in connection with patent demands that could "materially mislead" their recipients would be in violation of the FTC's ban on deceptive trade practices.

Meanwhile, the House's Goodlatte bill has dropped its most controversial measure: the expansion of the "covered business method" (CBM) patent review. Pro-patent-reform advocates wanted that provision to become law because it could let businesses challenge many patents for around $100,000—far less than fighting a case in federal court. Taking a patent case through trial there can cost between $1 million and $5 million.

While many Internet companies wanted to see the CBM program expanded, tech companies with big patent portfolios, including Microsoft and IBM, stood against the CBM.

But even the toned-down bill has caused a schism. About an hour ago, two key House Democrats, Reps. John Conyers (D-MI) and Mel Watt (D-NC), sent out a press release saying that they don't support the Goodlatte bill as it stands. "While we support measured and balanced changes to respond to the most egregious practices involving patents, we do not believe that this legislation should become a vehicle to pass far-ranging changes to the litigation system, such as limits on pleadings and discovery and intrusive mandates on the court system," stated the two Democrats. Conyers and Watt support the Senate's Leahy bill, however.

The Leahy bill doesn't include fee-shifting measures, but other parts of the two bills overlap. For example, both would force plaintiffs to be transparent about who owns a patent, and both would allow customer stays under certain circumstances.

The Business Software Alliance (BSA), a trade group dominated by big tech companies like Microsoft, IBM, and Apple, isn't too hot on the stay provision either. "The ‘customer stay’ language in the bill is a great start but needs to be crafted carefully to ensure bad actors can’t game the system," the BSA said in a statement. Despite this point of contention, the BSA supports the Leahy bill as a whole.

Update:This article originally stated that both the Leahy and Goodlatte bills lacked fee-shifting provisions. However, the Goodlatte bill's original fee-shifting provisions were not dropped when the document was amended. Ars regrets the error and has updated the text appropriately.

There is nothing at all bad about Trivial Patents. There what big companies use to prevent little companies becoming big companies. More the merrier. Innovation needs to be suppressed because it can change the status quo, and right now the status quo is that the existing big companies are big.

Two key House Democrats, Reps. John Conyers (D-MI) and Mel Watt (D-NC) are illustrating why campaign finance reform that prohibits anyone other than an eligible voter from making donations to political campaigns is essential before we'll get good laws that serve mainstream society and Main Street, rather than the narrow interests of mega business and the mega wealthy.

There is nothing at all bad about Trivial Patents. There what big companies use to prevent little companies becoming big companies. More the merrier.

One of the reasons that some people are making the covered business method review into a key issue is because they say it's the one reform that could actually raise overall patent quality. CBM is a process that could be used against both big company or small company patents.

Certainly, you don't have to agree that expanded CBM is good thing. But the language being used to support its expansion went to your point, I think.

The CBM is the only part of the scheme would be useful at all. Which is why it will not be included.

Maybe if they added a provision that the CBM process could only be applied if the patent owner had less than $100 million equity? That might get it through and clean up at least some of the junk.

There are other parts that are certainly useful, but the CBM part would have been the most useful when it comes to cleaning up bad patents. It's not a surprising that the companies with tons of patents would be against a system that might remove the patents they never should have gotten in the first place.

And putting an equity limit would not only be horrifying, but might not do what you think it would. Some of these patent troll companies bring in a lot of money. I'm not sure it's 100mil worth, but it's a lot.

patent owners have sent out thousands of letters to small businesses in the past few years asking for patent royalties, a pattern that has raised the ire of many in Congress

How is this any different from Sco sending out patent demands to linux companies and users? Would that have been forbidden under the new proposals? What is the definition of a patent troll? How can you possibly protect a business from being the target of a patent lawsuit, whilst at the same time allowing companies to still sue others for patent infringement? These are fundamental conflicting issues. If you explicitly protect end users then companies that roll their own tech solutions in house will be protected, but those that rely on external suppliers will still be vulnerable because their suppliers will be vulnerable. It seems the politicians have mistaken end users as the problem, when in fact it is only a symptom of the real problem, which is that anyone can potentially be put out of business if their product is found to be in violation of a patent that they can't work around. It also seems that this legislation would have the unintended effect of driving companies to use software technology procured via offshore companies with no US presence, because in that case, there would be no one to enforce a patent against. Offshore company is not US jurisdiction, US end user is not liable.

Far reaching reform is what is needed. That's the problem with Congress and especially. Democrats. While reps are sometimes idiots Democrats are lawyers. Not sure what is worse. 80 Republicans and 123 Democrats at last count.

While many Internet companies wanted to see the CBM program expanded, tech companies with big patent portfolios, including Microsoft and IBM, stood against the CBM.

This is important information. It highlights why it is so difficult to get comprehensive patent reform through Congress. - Extreme software patent abuse could be easy to identify. But the line between what is patent abuse vs. "legitimate" patent enforcement will be difficut to define when several powerful companies depend on enforcing software patents.

Wouldn't it be easier to amend patent law to provide "end users" of technology protection from patent litigation? That way the trolls would be forced to sue larger companies who may have the clout to invalidate the patent?

Wouldn't it be easier to amend patent law to provide "end users" of technology protection from patent litigation? That way the trolls would be forced to sue larger companies who may have the clout to invalidate the patent?

My biggest change would be to only allow the original producer or importer of a gods or service to be eligible for being sued for patent infringement. Only exception I see at this point would be "pure" works for hire, where the one hiring another ones manufacturing/production capacity is the one who needs to make all patent licensing deals.

I think the biggest patent reform isn't just business method, but software.

If I invent an automatic door closer that uses a spring to pull the door shut and patent it, that doesn't stop someone else from inventing an automatic door closer that uses a negative pressure piston to pull the door shut and patenting that.

So why doesn't that work for software? Why is the end result so important in software when it doesn't matter at all in physical patents?

If you invent a different way of solving the same problem, you shouldn't be infringing on someone's patent.

1) The House version still has the loser pays deal in it correct? It appears to me from the summary that the Leahy Senate bill does not have that. Is that correct?

2) I am guessing that BSA and the big tech companies made the argument that U.S. competitiveness would be hurt on the more expansive CBM - that that argument was the winner. Not the argument about innovation. In other words it was a protectionist argument about foreign competition. Although big tech will benefit from reduced competition - both foreign and domestic.

3) I haven't thought about it too carefully, but I am guessing big companies benefit from the loser pays system (two sided vs. one side) too don't they? If we lose broadened CBM then maybe in reconciliation we can get something better on cost shifting (ie someting one-sided but a little softer)?

CBM is about the only aspect of these bills that would be truly useful, and as someone else noted, it's the least likely to actually become law.

What we need is to completely eliminate software patents, but that'll never happen.

The way the system is set up now, all it does is drain the economy of productive resources and shifts them to a bunch of patent lawyers. Is there anyone that thinks it's a good thing that your mobile phone costs ~15% more because of patent licensing payments for patents that are so broad they should never have existed?

A Senator calling someone else a "bottom feeder", now that is rich! You have to give them credit for self-delusion though, as they look in the mirror each morning and never recognize themselves for what they truly are.

Software Patents should have a short expiration and they should pay a % of revenue in Fees to the P&TO. This would A) Drive quicker innovation B) Create a pot of money to pay patent holders based on merit/ prior work. C) Changes the focus from Litigation to proving a patents worth.

The disadvantages I see in this is Politics and Corruption of whomever makes those decisions, but we have that already.

Two key House Democrats, Reps. John Conyers (D-MI) and Mel Watt (D-NC) are illustrating why campaign finance reform that prohibits anyone other than an eligible voter from making donations to political campaigns is essential before we'll get good laws that serve mainstream society and Main Street, rather than the narrow interests of mega business and the mega wealthy.

How can house democrats be key to anything? The democrats have no power in the house whatsoever.

What we need is to completely eliminate software patents, but that'll never happen.

And while we're at it, eliminate business method patents. The two things are intertwined and at times it's hard to say whether the patent is on a business method, the software, or both. Both are essentially patenting ideas and/or math and both need to go. Keep patents strictly for physical devices, if you can't build it physically and drop it on a patent examiner's desk (or parking lot if it's a huge apparatus), it shouldn't get a patent.

Two key House Democrats, Reps. John Conyers (D-MI) and Mel Watt (D-NC) are illustrating why campaign finance reform that prohibits anyone other than an eligible voter from making donations to political campaigns is essential before we'll get good laws that serve mainstream society and Main Street, rather than the narrow interests of mega business and the mega wealthy.

How can house democrats be key to anything? The democrats have no power in the house whatsoever.

This issue might cut in weird ways. Democrats bend over backwards for plaintiff's attorneys. But, Republicans tend to favor stronger IP rights. And, we are talking about big business here. On this one minority/majority Democrate/Republican matters less. This is a bipartisan issue. Although I think Obama has been doing a lot more talking than doing. His Judicial appointment when he was solicitor general wrote a brief that appeared to me to want to restrict the ability of district court judges to through crappie unpatentable subject matter out quickly without a lot of expense for the defendent, not to mention valuable court time. While it is terrible the cost of defense to the defendent, there is also a toll on the court system. These things take a tremendous amount of effort from the lower courts. So anyway, I wouldn't look too closely at party lines. This issue in fact gives a real good look at politicians and where their loyalties lie because they don't have to be in lock step usually.

As to the campaign finance reform. Do you know how much money lawyers are already making on the campaign finance laws as they exist now? Its a full employment statute for a certain type of lawyer in D.C. . To raise money now you compete with the most clever lawyers on finding loopholes and whatnot. And of course passing laws that favor one party or the other. Maybe getting exemptions for certain types of entities - that's all quite lucrative in and of itself. People are free to vote Conyers and Watt out of office if they choose to do so. Once you start passing laws limiting freedom in relation to political activity to protect people who are ostensibly too stupid you are headed down a path that won't end well. If either party gains a super majority I can tell you what will happen. As an example, either unions polictical power will be cut way back. Or business political power will be cut way back.

Is there anything that the average person can do to help with patent reform?

For example I'm not sure if this legislation is the type of thing influenced by contacting your representatives, or if it would be insignificant compared to the lobbying and large cash donations being made...

Two key House Democrats, Reps. John Conyers (D-MI) and Mel Watt (D-NC) are illustrating why campaign finance reform that prohibits anyone other than an eligible voter from making donations to political campaigns is essential before we'll get good laws that serve mainstream society and Main Street, rather than the narrow interests of mega business and the mega wealthy.

How can house democrats be key to anything? The democrats have no power in the house whatsoever.

This issue might cut in weird ways. Democrats bend over backwards for plaintiff's attorneys. But, Republicans tend to favor stronger IP rights. And, we are talking about big business here. On this one minority/majority Democrate/Republican matters less. This is a bipartisan issue. Although I think Obama has been doing a lot more talking than doing. His Judicial appointment when he was solicitor general wrote a brief that appeared to me to want to restrict the ability of district court judges to through crappie unpatentable subject matter out quickly without a lot of expense for the defendent, not to mention valuable court time. While it is terrible the cost of defense to the defendent, there is also a toll on the court system. These things take a tremendous amount of effort from the lower courts. So anyway, I wouldn't look too closely at party lines. This issue in fact gives a real good look at politicians and where their loyalties lie because they don't have to be in lock step usually.

As to the campaign finance reform. Do you know how much money lawyers are already making on the campaign finance laws as they exist now? Its a full employment statute for a certain type of lawyer in D.C. . To raise money now you compete with the most clever lawyers on finding loopholes and whatnot. And of course passing laws that favor one party or the other. Maybe getting exemptions for certain types of entities - that's all quite lucrative in and of itself. People are free to vote Conyers and Watt out of office if they choose to do so. Once you start passing laws limiting freedom in relation to political activity to protect people who are ostensibly too stupid you are headed down a path that won't end well. If either party gains a super majority I can tell you what will happen. As an example, either unions polictical power will be cut way back. Or business political power will be cut way back.

I'm not sure why you wasted so much space writing all of this. You could have just said you're kind of a conspiracy theorist.

"About an hour ago, two key House Democrats, Reps. John Conyers (D-MI) and Mel Watt (D-NC), send out a press release saying they don't support the Goodlatte bill as it stands. "While we support measured and balanced changes to respond to the most egregious practices involving patents, we do not believe that this legislation should become a vehicle to pass far ranging changes to the litigation system, such as limits on pleadings and discovery and intrusive mandates on the court system," stated the two Democrats. Conyers and Watt support the Senate's Leahy bill, however."

Should read as:"The guys who bought & paid for our loyalty a long time ago don't like this bill because they aren't content with Billion dollar quarters why the rest of America dwindles away, they want more. Were going to give it to them, because they told us to & they are our constituents. Your just a bunch of assholes that actually believe what we say..... And further more, we(the congress) would appreciate it if you people would just accept the fact that we are not going to do anything about Energy policy, Healthcare reform, Climate change, bulk surveillance, our radical foreign policy, and definitely not poor education or homelessness or any silly things like that. Listen we spent a long time getting this system dialed in to make it the most profitable it can be for us & our constituents. We are not about to change any of that for the greater good, we don't care about the greater good, we care about money & power and we already have it all."

Two key House Democrats, Reps. John Conyers (D-MI) and Mel Watt (D-NC) are illustrating why campaign finance reform that prohibits anyone other than an eligible voter from making donations to political campaigns is essential before we'll get good laws that serve mainstream society and Main Street, rather than the narrow interests of mega business and the mega wealthy.

How can house democrats be key to anything? The democrats have no power in the house whatsoever.

I'm not sure why you wasted so much space writing all of this. You could have just said you're kind of a conspiracy theorist.

LOL. You are right that was pretty wordy. Nevertheless, House Democrats will be important. So will Senate Republicans. And campaign finance reform is a bad idea.

Wouldn't it be easier to amend patent law to provide "end users" of technology protection from patent litigation? That way the trolls would be forced to sue larger companies who may have the clout to invalidate the patent?

Both bill include provisions for a "customer stay." That will only happen when a manufacturer and an end-user agree that the manufacturer should take over the litigation. (We'll see if it makes the final bill, some people are against it.)